Russian instability a "50%" probability

Rick Moran
Ed Lasky points us to this excellent article in today's Washington Post by Masha Lipman that looks at the deteriorating situation in Putin's Russia thanks largely to a massive fall off in oil revenue.

Lipman quotes "[o]ne of Russia's savviest politicians," Anatoly Chubais, who thinks the chances for "serious turmoil" in that country - social, political, and economic - is as high as 50%:

The country's best nongovernmental pollster, the Levada Center, reports that the public mood has darkened significantly. The percentages of those who think the country is moving in the right direction vs. the wrong direction has shifted from 61 percent vs. 24 percent in September to 43 percent vs. 40 percent in December, it found. People feel insecure.

A major protest took place last month in the Russian Far East. Thousands rallied against a government decision to raise tariffs on imported cars, a measure intended to protect the domestic automobile industry, whose cars are of notoriously low quality. Higher tariffs will have a grave effect on a region where the vast majority of residents drive used vehicles imported from Japan and where many depend on semi-legal sales of Japanese vehicles to Russian regions farther west. The protesters angrily demanded that the decision be revoked. Some even carried signs demanding the resignation of Putin and his Cabinet.

Russia last experienced large socioeconomic protests in 2005, when pensioners rallied against a reform plan that threatened their entitlements. Putin's government responded by freezing the reform and pouring money into social programs. Today, with revenue so dramatically diminished, Russia can hardly avoid painful measures. The leadership got tough with the tariff protest: Special police brought in from central Russia beat demonstrators and even some journalists; many people were detained. Seeking to keep unrest from spreading, national TV channels -- the media with the largest audience -- simply did not cover the situation.

Despite public concerns raised by the crisis, Putin's approval rating remains high: 83 percent, down slightly from 88 percent in September. Putin's popularity is the very foundation of Russia's regime, in which government institutions have been emasculated and power is concentrated in the hands of the top leader. This unique advantage placed him above all others among the political elite. But if the economic crisis erodes this broad support, the elite's loyalty may also be shaken. There's enough reason for discontent as it is, such as the nontransparent, and probably corrupt, distribution of anti-crisis funds or the suspicion that top government officials are using the crisis to redistribute assets in favor of cronies.

We must be careful in writing about Russia these days since many on the left take any criticism of Russia by conservatives as a sign that we want to revive the cold war. Since I could not care less if liberals want to renew their old love affair with the Russkies and place themselves firmly on the side of authoritarianism, the information here bears looking into.

My problem is that given the state of Russian society in the decade after Communism fell and the relatively peaceful changeover to a more democratic nation (subsequently set back by Putin's "reforms"), it is hard to see how the economy could get much worse than that or society be any less resilient.

Any unrest today will be met with the iron fist of repression - of this we can be sure. But will it be successful in tamping down people's anger? Probably not writes Lipman. Read the whole thing for an interesting peek into a possible future where Putin may be forced to liberalize in order to survive.

Update from Thoms Lifson: 

More bad news for Russia: its bullying of Ukraine with natural gas isn't working anymore in this era of abundant supply. From the International Herald-Tribune:


In the face of mounting economic troubles, Russia cut off deliveries of natural gas to Ukraine on Thursday after Ukraine rejected the Kremlin's demands for a sharp increase in gas prices.

A similar reduction in supplies to Ukraine in 2006 caused a drop in pressure throughout Europe's integrated natural gas pipeline system and led to shortages in countries as far away as Italy and France.

But with a recessionary drop in demand, ample supplies and assurances from both countries that gas would flow westward without interruption, there were few signs of the near hysteria in Europe that accompanied the 2006 cutoff.



 
Ed Lasky points us to this excellent article in today's Washington Post by Masha Lipman that looks at the deteriorating situation in Putin's Russia thanks largely to a massive fall off in oil revenue.

Lipman quotes "[o]ne of Russia's savviest politicians," Anatoly Chubais, who thinks the chances for "serious turmoil" in that country - social, political, and economic - is as high as 50%:

The country's best nongovernmental pollster, the Levada Center, reports that the public mood has darkened significantly. The percentages of those who think the country is moving in the right direction vs. the wrong direction has shifted from 61 percent vs. 24 percent in September to 43 percent vs. 40 percent in December, it found. People feel insecure.

A major protest took place last month in the Russian Far East. Thousands rallied against a government decision to raise tariffs on imported cars, a measure intended to protect the domestic automobile industry, whose cars are of notoriously low quality. Higher tariffs will have a grave effect on a region where the vast majority of residents drive used vehicles imported from Japan and where many depend on semi-legal sales of Japanese vehicles to Russian regions farther west. The protesters angrily demanded that the decision be revoked. Some even carried signs demanding the resignation of Putin and his Cabinet.

Russia last experienced large socioeconomic protests in 2005, when pensioners rallied against a reform plan that threatened their entitlements. Putin's government responded by freezing the reform and pouring money into social programs. Today, with revenue so dramatically diminished, Russia can hardly avoid painful measures. The leadership got tough with the tariff protest: Special police brought in from central Russia beat demonstrators and even some journalists; many people were detained. Seeking to keep unrest from spreading, national TV channels -- the media with the largest audience -- simply did not cover the situation.

Despite public concerns raised by the crisis, Putin's approval rating remains high: 83 percent, down slightly from 88 percent in September. Putin's popularity is the very foundation of Russia's regime, in which government institutions have been emasculated and power is concentrated in the hands of the top leader. This unique advantage placed him above all others among the political elite. But if the economic crisis erodes this broad support, the elite's loyalty may also be shaken. There's enough reason for discontent as it is, such as the nontransparent, and probably corrupt, distribution of anti-crisis funds or the suspicion that top government officials are using the crisis to redistribute assets in favor of cronies.

We must be careful in writing about Russia these days since many on the left take any criticism of Russia by conservatives as a sign that we want to revive the cold war. Since I could not care less if liberals want to renew their old love affair with the Russkies and place themselves firmly on the side of authoritarianism, the information here bears looking into.

My problem is that given the state of Russian society in the decade after Communism fell and the relatively peaceful changeover to a more democratic nation (subsequently set back by Putin's "reforms"), it is hard to see how the economy could get much worse than that or society be any less resilient.

Any unrest today will be met with the iron fist of repression - of this we can be sure. But will it be successful in tamping down people's anger? Probably not writes Lipman. Read the whole thing for an interesting peek into a possible future where Putin may be forced to liberalize in order to survive.

Update from Thoms Lifson: 

More bad news for Russia: its bullying of Ukraine with natural gas isn't working anymore in this era of abundant supply. From the International Herald-Tribune:


In the face of mounting economic troubles, Russia cut off deliveries of natural gas to Ukraine on Thursday after Ukraine rejected the Kremlin's demands for a sharp increase in gas prices.

A similar reduction in supplies to Ukraine in 2006 caused a drop in pressure throughout Europe's integrated natural gas pipeline system and led to shortages in countries as far away as Italy and France.

But with a recessionary drop in demand, ample supplies and assurances from both countries that gas would flow westward without interruption, there were few signs of the near hysteria in Europe that accompanied the 2006 cutoff.